The world of digital transactions is undergoing a consistent change and this change can be credited to the many fast growing cryptocurrency exchange platforms. They enable you to trade bitcoins and other cryptocurrencies without any hassle. You can use these wallets to deal in the digital currencies safely. But, choosing a cryptocurency wallet type is the first step in the process of Cryptocurrency Wallet Development .This article shall help you understand the advantages and disadvantages of the various types of cryptocurrency wallets, helping you to choose the right one for your needs.
Hot Wallet vs Cold Wallet
Hot wallets are deemed less secure cryptocurrency wallets because of the risk to privacy posed by free internet access. But, they are the most convenient and user-friendly wallets.
On the contrary, cold wallets are the ones that store data offline and offer improved security.
A hot wallet is suitable for small, day-to-day transactions; whereas, a cold wallet is used for long term holdings to avoid any huge theft.
Public and Private Keys
Let us first clear the fact that Bitcoin or other cryptocurrencies or cryptocurrency exchange platforms do not get hacked, in fact the devices that store private keys do.
A multisig wallet, short for “multisignature” wallet, is the one that requires input from multiple parties in order to complete a single transaction.
A multisig wallet is ideal for use by families and businesses alike, where all parties need to enter their PIN in order to complete a transaction.
Some wallets only hold one type of cryptocurrency, while others allow storage of multiple types of cryptocurrencies.
The 5 types of Cryptocurrency wallets
Cryptocurrency wallets are segregated in five broad categories- online (web), mobile, desktop, hardware, and paper wallets- on the basis of their level of security.
Now that you have a little foundation of cryptocurrency wallet development, let’s take a look at the 5 different types of cryptocurrency wallets offered by cryptocurrency exchange platforms along with their advantages and disadvantages.
1. Web Wallet
Online wallets are typically those which can be accessed via any web browser. Hot wallets are popularly referred to as online wallets.
- Fastest and complete transactions;
- Ideal for storing small amount of cryptocurrencies;
- Some even store or hold multiple cryptocurrencies.
- Users are vulnerable to theft, hacking, scams or invasion of privacy;
- the coin information is stored with a third-party.
2. What is a Mobile Wallet?
Mobile wallets provide access to cryptocurrencies via a cryptocurrency exchange platform. It is very easy to create your own bitcoin wallet on the mobile sets.
- Easy to use;
- More privacy;
- Provides additional features.
- Mobile phones are highly vulnerable to malware and pose a great threat to the cryptocurrencies.
3. What is a Desktop Wallet?
A desktop wallet is more secure than an online wallet and a mobile wallet. This could be considered as a really effective cold storage method.
- Easy to use crypto wallet;
- Private keys are not stored with a third-party server.
4. What is a Hardware Wallet?
Hardware wallets are slightly less user-friendly than web wallets and desktop wallets. They are great for holding large amounts of cryptocurrencies as they offer more control.
- Stronger security than all other wallets.
- Difficult for beginners to understand access.
5. What is a Paper Wallet?
Before hardware wallets, paper wallets were standard for cold storage of cryptocurrencies.
- Hack-proof as private key is not stored on a third party server. In fact, it does not even involve internet connectivity.
- Requires effort to move the currency around;
- Technical Understanding is imperative to work effectively.
Now that we have equipped with all the information required to create your own bitcoin wallet or for multiple cryptocurrencies, choose the best cryptocurrency exchange platform to further your objectives in this growing field of opportunities.